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AB103 – Statistical and Quantitative Methods
Solutions  Tutorial 6
Textbook Exercises
:
Chapter 3 (ASW)
3.13 (pages 132134)
a.
U
= 800
H
= 1200
Estimated Annual Return = $8400
b. Constraints 1 and 2. All funds available are being utilized and the maximum
permissible risk is being incurred.
c.
d. No, the optimal solution does not call for investing the maximum amount in U.S. Oil.
3.14 (pages 132134)
a. By more than $7.00 per share
b. By more than $3.50 per share
c. None. This is only a reduction of 100 shares and there is slack for this constraint is 200.
3.20 (pages 137138)
a. Manufacture 100 cases of model A
Manufacture 60 cases of model B
Purchase 90 cases of model B
Total Cost = $2170
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b. Demand for model A
Demand for model B
Assembly time
c.
d.
The assembly time constraint. Each additional minute of assembly time will decrease
costs by $.375.
Note that this will be true up to a value of 1133.33 hours.
We may say that the demand constraint for model A should be selected because
decreasing the demand by one unit will decrease cost by $12.25. But, carrying this
argument to the extreme would argue for a demand of 0.
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 Spring '10
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 Optimization, BMW Sports Activity Series, optimal solution

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